30 Comment

    • Ashy Oldlady

      Douglas Development has been notorious for sitting on property for years, perhaps even decades, yet they mysteriously don’t seem to get hit with the vacant property tax rate.

    • OP is being snarky because developers take a long time to actually begin a project. With architecture, getting through design review revision after design review revision with the local fiefdom lords of the ANC that OP is no doubt King of, and then DC permitting. All the red tape can take a long time to get through in DC. So companies like Douglass and their ilk, have a reputation of taking a long time between buying something, until it is developed. OP just hasn’t had his coffee yet today. Another little trick of the developers is to put a property for sale for a crazy price, or for rent for a crazy price. That way no one will actually come and buy or rent it. And if they do then you get a great return. The reason for this is that if a property is vacant the tax rate jumps over 500%. But if the property is for sale or lease it is exempt from the vacant property tax rate.

  • This post is six years old, but it explains some of the things that might still be going on regarding questionable habits and practices of the Douglas Development Corporation:

    http://www.popville.com/2010/08/douglass-development-corporation-hero-or-horses-ass/#comments

  • I second the “Huh” comment. I can only assume that you think that Douglas Development Corp will keep the place vacant for a while, but that’s not common knowledge. Step it up, Popville.

  • Because Douglas is a notorious land-banker and willing to hold properties off market indefinitely to fulfill their corporate priorities. Some of the classic examples have finally been leased in the past couple of years – blocks like the 1000 block of F St NW and 7th St NW across from the convention center – both had vacancies for 10+ years with no movement. Oh, and Douglas somehow also managed to avoid paying any applicable vacant tax properties, too.

    • how can their corporate priorities include not generating lease revenue?

      • Bear

        They own so many properties – my sense is that they put their efforts into leasing the ones that will bring in the most bang for the buck. They own almost all of the commercial buildings in Riverdale’s town center, and almost all of them are vacant – despite the fact that they put money into renovating them all a few years ago. Rumor has it that they’ve told the town they won’t do anything to help get tenants in until the town council stops being so lenient on enforcing its own business regulations, but who knows how much truth there is to that.

      • If you sign a 10-year commercial lease today that will be way under-market in a few years (based on projected growth of the neighborhood), maybe it would be better to wait it out a bit and then lease it when it is at its peak value? I don’t know the logic, but there are a bunch of Douglas spots in on North Cap that remain unleased/undeveloped.

        • …to say nothing about all the land they own across the street from those properties on N Cap. I’m guessing that they are essentially waiting for someone to essentially “commission” a building to be built for them on that site. (They had high hopes that the Nats stadium would be built on that site.)

      • I’ve heard that Douglas is keeping the Riverdale buildings vacant because they are holding out for larger businesses to move in that can and will pay higher rents (Starbucks, Potbelly, blah blah blah) once the new Whole Foods opens up the street on Route 1. Until then, they have no interest in doing anything with their vacant commercial buildings in the town center and are happy to sit on them until the big guys are ready to move in.

        • Bear

          Ugh. This is so not what I want to hear – there will be plenty of that in the new Whole Foods development. I do know that a brew pub is trying to open, but I’m not sure if the delay is being caused by Douglas or by the town council, which seems to have its own issues.

      • justinbc

        Many buildings owned by Douglas were purchased during DC’s worst economic periods. They cost the company virtually nothing to hold, especially when they can skirt the vacancy taxes. A marginal lease paying thousands of dollars a year now pales in comparison to future benefits (of any given property) in the millions.

  • “This sign” in the description links to a post from several years ago where he explained his feelings at the time about the company.

  • I’ve worked with a handful of the big owners/ developers in town, and IME Douglas is shady AF. Definitely the worst of the bunch. I get a little angry every time I see they’ve acquired another piece of my town to neglect.

    • Yup. There was a great article not long ago in the WCP about Douglas failing to pay many of its contractors, getting sued, etc. The vast majority of what they develop is done by over-leveraging themselves to the point where they can’t pay basic bills if something goes ever-so-slightly awry. They’re sort of like a “too big to fail” pyramid scheme at this point.

  • shouldn’t we be concerned the property will not lease for a while because of all the restaurant and bar closures on that strip and in Dupont in general? This has been the topic of at least one Popville post per month about how nightlife and restaurant boom has moved east and Dupont, Adams Morgan and Georgetown retail vacancies continue to increase. So this building will face an uphill battle because there is no draw for a bar or restaurant owner to operate here when he/she can pay the same price and get a bigger draw located on H Street NE, U or 14th Street.

    For those of you who know anything about restaurant and bar nighlife you would know that one day your the flavor of the month, the next day someone else is the best ____ in DC. I used to go to Science Club but then a dozen bars opened up in other neighborhoods that had much more to offer (at the time). Plus my tastes had changed and I stopped going out in Dupont.

    • While much of that is true, look at Bonfire that opened up right next door. That place seems to be packed solid every time I have been by. Who knows about their long term success, but the area is still a dense business district. Weekdays/nights can still be a big draw.

      • Good to hear a new business opening up next door and doing well. But like i said it was the same story for Science Club when it first opened…it was packed because it was new but could not compete because it became a generic bar in Dupont. The daytime crowd is great from lunch to HH then people flock to the neighborhoods I listed above.

        Anyone remember the popville article one of the Science Club owners wrote about the change in clientele? Another reason why businesses fail is they do not see what they are doing wrong and how to correct it and instead blame everyone but the business model.

  • Douglas plays the financially-correct, but awful for the community, game of looking at their investments with a 30-50 year time horizon in mind. In that context, sitting vacant for 10 years is fine if the property gets sold at 20x its acquisition cost at year 20. Or even just sitting vacant for all 20 years then getting sold for 20x. The only way to change this financial calculus is to aggressively tax this behavior – that’s literally the only way to do it, and Douglas has figured out who to pay off to keep that from happening. It’s quite remarkable that this is transparently obvious yet somehow we can’t find political will to stop it from happening, especially since forcing development of vacant properties is by far the most efficient way of increasing affordable housing (because you’re introducing more supply). Of course, increasing affordable housing by lower market rate prices hurts all of us homeowners, which contributes to our inability to muster political will to change things.

    • You can insert any developer’s name in your statement. Actually if you knew anything about the company you would know it does not sell its properties and has a long term outlook.

      Awful for the community? Do you know anything about what their development portfolio has done for Penn Quarter, Shaw or Ivy City neighborhoods? Go to an ANC meeting and find out.

      • I think reality meant “awful for the community” in the sense that it’s not very good for very local neighborhoods to have vacant sometimes blighted properties sit as such for years – nobody removes snow from in front of them, the general appearance is usually quite unattractive and most importantly (imho) the would-be business tenant isn’t contributing to the community by offering employment opps, paying taxes, serving as a gathering place or anything else. The negatives of a single vacant building far outweigh the positives.
        .
        I do take a bit of issue with “financially-correct” though. If a developer filled its buildings at market rates, their profit if sold after decades could be greater due to the rent they’d have taken in during those years. Yes there would be costs involved (building maintenance, labor in the form of property manager, etc.) but they would likely be lower than rent. I also think calling their strategy “financially correct” is inaccurate considering Douglas is known to attempt, in many cases successfully, skirt the relevant taxes.
        .
        Tangentially, it seems to me that most large cities have at least one if not a few major developers who are well-known in the industry and by those who follow along as shady AF as commented earlier. I know for a fact there is a pretty similar situation happening in Minneapolis (family in the biz there), unfortunately.

      • Douglas owned undeveloped/vacant property in Shaw and Ivy City for at least 30 years. And I find both neighborhoods to still be too sketchy to live in. Why wait decades before improving those neighborhoods if not to maximize profit?

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